How can the priority of a junior lien be changed?

The priority of a junior lien can be changed through the agreement of the lienor to subordinate the lien. In real estate and lien law, subordination is a legal agreement that allows a junior lienholder to move down in priority below another lien, typically a senior lien, when it comes to claims against the property. This is usually done voluntarily by the junior lienholder, often in exchange for certain benefits or to facilitate refinancing or a sale of the property.

For example, if a homeowner wants to refinance their first mortgage, the junior lienholder might agree to subordinate their position to allow the refinancing to proceed. This agreement effectively alters the terms of priority, ensuring that the new lender has the first claim against the property, thus enhancing the likelihood of obtaining the loan.

Other options do not effectively address how to change the priority of a junior lien. Changing ownership of the property does not inherently change lien priorities; filing a claim in court typically pertains to disputing the existence or validity of a lien, not changing its priority; and while paying off a senior lien can lead to a change in the total debt on the property, it does not affect the priority of existing liens themselves. Thus, agreement for subordination remains the primary method to adjust lien priority.